# Consignment Accounts MCQ

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1. P sends out goods costing Rs.3, 00,000 to Y at cost + 25%, consignor’s expenses Rs.5, 000. 1/10th of goods were lost in transit. Insurance claim received Rs.3, 000. The net loss on account of abnormal loss is:

(a)    Rs.27,500

(b)    Rs.25,500

(c)    Rs.30,500

(d)    Rs.38,000

The abnormal loss is {(3,00,000+5,000) x 1/10} – 3000 = 30500 – 3000 = 27500. Hence option (a) is correct

2. X sends out goods costing Rs.2, 00,000 to Y. 3/5th of the goods were sold by consignee for Rs.1, 40,000. Commission is 2% on sales + 20% of goods sold exceeding cost price. The amount of commission will be:

(a)    Rs.5,667

(b)    Rs.6,800

(c)    Rs.6,000

(d)    Rs.5,600

Value of 3/5 th goods sold = 3/5 x2,00,000 = 1,20,000. Extra price received (profit) = 1,40,000 – 120000=20000. Commisssion = 2% of 1,40,000 + 20% of (20,000) = 2800+ 4000= 6800

Hence option (b) is correct

3. A proforma invoice is sent by:

(a)    Consignee to consignor

(b)    Consignor to consignee

(c)    Debtors to consignee

(d)    Debtors to consignor

A pro-forma invoice is sent by consignor to consignee giving description and value of goods sent.

Hence option (b) is correct.

4. P sold goods to Q on consignment. Q sold the goods to R. R sold the goods to S. Who is the debtor in the books of P :

(a)    Q

(b)    R

(c)    S

(d)    all of Q, R & S.

Here Q is consignee. Actual customer of P is R whom the goods were sold by his consignee Q. S is customer of R, not of  P. So, R is the debtor in the books of P. So, answer is (b).

5. Commission provided by the consignor to the consignee to cover bad debt is known as

(a)    Ordinary commission

(b)    Del credere Commission

(c)    Over-riding commission

(d)    Special commission.

Del-credere commission is the commission which is provided by the consignor to the consignee to promote credit sales and which is allowed to cover loss of due to bad debts only. Hence option (b) is correct.

6. Over-riding commission is calculated on:

(a)    Cash sales

(b)    Credit sales only

(c)    Sales at higher price

(d)    Credit sales less cash sales.

Over-riding commission is an additional commission payable to consignee by consignor on total sales amount for making sales at above specific price or at above invoice price.

Hence option (c) is correct.

7. If the del credere commission is 10%, cash sales is Rs.5,000 and credit sales is Rs.10, 000. Calculate the amount of del credere commission.

(a)    Rs.1,500

(b)    Rs.1,000

(c)    Rs.500

(d)    None of the above.

Del-credere commission is calculated on total sales i.e. cash and credit sales (unless there is any agreement to pay on Credit sales only). So, the amount of del-credere commission = Rs.(10,000 +5,000) x 1/10 = Rs.1,500. Hence option (a) is correct

8. Del credere commission is allowed to cover-

(a)    Normal loss

(b)    Abnormal loss

(c)    Loss due to bad debts

(d)    All of the above

Del-credere commission will save consignor from loss of bad debts .  So, option (c) is correct.

9. X sent goods costing Rs 2,00,000 to his consignee Y, to be sold at 20% above cost. Y sold goods of  Invoice value of Rs.1,20,000 on credit, and 30,000 in cash. Goods costing 12000 were destroyed in Fire. Y is entitled to Commission of 10% + 2% Del credere commission on sale. What would be commission payable to Y

(a)    18000                                                          √

(b)    3600

(c)    24000

(d)    12000

Y will get commission of 10+2=12% on (1,20,000+30,000), i.e on 12% on 1,50,000 = 18,000. So, option (a) is correct.

MCQ Videos – Consignment Accounts Video #1: 1-9

10. The unsold stock on consignment is valued at-

(a)    Original cost of the goods

(b)    Original cost + expenses incurred by both consignor and consignee

(c)    Original cost + expenses incurred only by the consignee

(d)    Original cost + all expenses incurred by consignor & consignee

The unsold stock on consignment is valued at Original cost + expenses incurred by both consignor and consignee. So, option (b) is correct.

11. Consignment Stock is valued

(a)    Cost price

(b)    Market price

(c)    Selling price

(d)    Cost or net realizable value, whichever is less.

Like Closing stock, the Stock with consignee is valued at cost or net realizable value whichever is less. So, option (d) is correct.

12. X sends out goods costing Rs.3, 00,000 to Y at cost + 20%. Consignor’s expenses Rs.6, 000. 10% of the goods were lost in transit. 2% of the goods evaporated (normal loss).  Insurance claim received Rs.2, 000. The net loss on account of abnormal loss is:

(a)    Rs.28,600

(b)    Rs.26,600

(c)    Rs.31,600

(d)    Rs.27,000

Net abnormal loss = [{(3,00,000 + 6,000)} x 10 /100] – 2,000 = Rs.(3,06,000 x 10 /100) – 2,000 = Rs.30,600 – 2,000 = Rs.28,600. So, option (a) is correct.

(evaporation is normal loss, hence not counted)

13. Goods sent to consignment at cost + 33.33%.  The percentage of loading on invoice price will be:

(a)    25%

(b)    33.33%

(c)    20%

(d)    None of the above.

Goods sent on consignment = Cost + 33.33 % i.e. (100 + 33.33) % = 133.33 %. Invoice price 133.33 when cost price 100. Invoice price is 100, when cost price = 100 x 100/ 133.33 = 75 % (Cost price). So, the % of loading =(100 – 75)% = 25%. So, option (a) is correct.

14. Goods sent out on consignment Rs.7, 60,000. Opening consignment stock Rs.48, 000. Cash sales Rs.7, 50,000. Consignor’s expenses Rs.30, 000. Consignee’s expenses Rs.22, 000. Commission Rs.20,000. Closing consignment stock Rs.2, 70,000. The profit on consignment is:

(a)    Rs.1,50,000

(b)    Rs.1,40,000

(c)    Rs.92,000

(d)    None of the above.

Profit on consignment = (Sales + Closing stock) – (Goods sent out + Opening stock + Consignor’s expenses + Consignee’s expenses + Commission)

= Rs.(7,50,000 + 2,70,000) – Rs.(7,60,000 + 48,000 + 30,000 + 22,000 + 20,000)

= Rs.(10,20,000 – 8,80,000) = Rs.1,40,000. So, option (b) is correct.

15. X sends out 50 boxes to Y of Delhi costing Rs.200 / box. Consignor’s expenses

Rs.2, 000. Consignee’s expenses on selling Rs.1, 500. 3/5th of the goods sold by consignee, ½ of the balance goods were lost in consignee’s godown due to fire. The value of abnormal loss will be:

(a)    Rs.2,700

(b)    Rs.2,400

(c)    Rs.4,200

(d)    None of the above.

Total cost of goods = Rs.(50 boxes x Rs.200) + 2,000 = Rs.12,000

Cost of goods sold = Rs.12, 000 x (3 /5) = Rs.7, 200.

So, the value of abnormal loss (half the goods lost) = Rs. ½ x (12,000 – 7, 200) = Rs.2, 400.

So, option (b) is correct.

16. Goods costing Rs.2, 00,000 sent out to consignee at cost + 25%. Invoice value of the goods will be:

(a)    Rs.2,50,000

(b)    Rs.2,40,000

(c)    Rs.3,00,000

(d)    None of the above.

Invoice value of the goods = 2,00,000 + 25% of 2,00,000 = 2,00,000 + 50,000=.2, 50,000.

So, option (a) is correct.

17. Goods of the invoice value Rs.2, 50,000 sent out to consignee at 20% profit on cost. The loading amount will be:

(a)    Rs.40,000

(b)    Rs.48,000

(c)    Rs.50,000

(d)    None of the above.

The amount of loading Amount = Rs.2, 50,000 x 20 /100 = Rs.50, 000. So, option (c) is correct.

18. In the books of consignor, the profit of consignment will be transferred to:

(b)    General P/L A/c

(c)    Drawings A/c

(d)    None of the above.

In the books of consignor, the profit of consignment will be transferred to General P/L A/c. So, option (b) is correct.

MCQ Videos – Consignment Accounts Video #2: 2-18

19. Relation between Consignor and consignee is as a

(a)    Master and servant

(b)    Debtors and creditor

(c)    Principal and agent

Relationship between consignor and consignee is that of principal and agent. So, option (c) is correct.

20. Balance of consignment account shows

(a)    Stock lying with consignee

(b)    Profit and loss on consignment

(c)    Amount due from consignee

(d)    Amount due to consignee.

The balance of consignment account shows profit and loss on consignment.

So, option (b) is correct.

21. Consignment stock A/c is a

(a)    Representative personal A/c

(b)    Real A/c

(c)    Nominal A/c

(d)    Personal A/c.

Consignment stock A/c is a Representative personal A/c.

So, option (b) is correct.

22. Which of these accounts are opened in the books of consignee?

(a)    Consignor A/c

(b)    Goods sent on consignment A/c

(c)    Consignee personal A/c

(d)    Consignment A/c.

Consignor A/c is opened in the Books of Consignee.

So, option (a) is correct.

23. The balance of consignment stock lying with Consignee is shown at

(a)    Assets side of balance sheet of Consignor

(b)    Liability side of balance sheet of Consignee

(c)    Asset side of balance sheet of Consignee

(d)    As contingent assets in Financial Statement of Consignor

The balance of consignment stock is called closing stock and like any other business it is current assets and shown assets side of Balance sheet.

So, option (a) is correct.

24. In case del credere commission is allowed to consignee, then the Consignee bears

(b)    Consignor’s expenses

(c)    Consignee’s expenses

(d)    All of the above.

In case of del-credere commission, is allowed to consignee, then the loss of bad debts will be borne by consignee.

So, option (a) is correct.

25. Consignment Stock is valued at,

(a)    Cost price

(b)    Market price

(c)    Selling price

(d)    Cost or net realizable value, whichever is less.

Like Closing stock, the Stock with consignee is valued at cost or net realizable value whichever is less.

So, option (d) is correct.

26 If Del Credere commission is allowed for bad debt, consignee will debit the bad debt amount in his books in :

(a) Commission Earned Account

(b) Consignor Account

(c) Debtors Account

In case of Del Credere Commission, Consignee is responsible for loss of Bad Debts. Bad Debts is loss of earnings from Commission. Bad Debts loss would be debited to Commission Earned Account.

So option (a) is correct.

27. The owner of the consignment stock is

(a) Consignor

(b) Consignee

(c) Debtors

(d) None

Consignor is the owner of consignment stock, even if the stock is lying with consignee. Consignee is just an holding the stock as Agent, for purpose of sale on behalf of the consignor.

So, option (a) is correct.

MCQ Videos – Consignment Accounts Video 3: 19-27